Rapid-Fire Traders' Big Fear: Themselves

Some high-frequency firms have begun to worry publicly that the markets need new controls. Jenny Strasburg discusses on Markets Hub. Photo: Getty Images.

This transcript has been automatically generated and may not be 100% accurate.

... I ... money speaks to all the Journal ... story on the way through ... that ... high-speed traders should give ... high-speed trading firms don't hear a lot of the Opel publicly often but they are starting to talk publicly what a Frito ... that is the point that story that's the question that is overestimating the markets of this morning ... I Jenny Strasburg with me who wrote the story Jamie Allen tied ... on ... place the firm's created column here ... had they created something that they can't quite control well I mean a lot has happened this year that has put them more in the spotlight then you've been you know ... on top of the two thousand ten flash crash which we've all heard an infinite amount about ... so he really is kind of bag bubbling to the surface much more today and in Washington DC at the Securities and Exchange Commission there's that ... a roundtable meeting at the public discussion with ... a good dozen people from the industry and are talking about ... the near failure of a brokerage firm in August of Knight Capital which survive that had to seek rescue financing trading errors ... there been a series of these this year ... and you know it's it's kind of freaking out insiders' because the they see their own ... risks reflected in what happen with night so that's what we see a play here in ... the FCC chairman yesterday Mary Shapiro told me ... that ... the tone is changing and her conversations with the industry she said ... there's fear there's a willingness to talk so that's what we read about today ... than it did when I did was start basically half an hour for this year ... well I mean they they were like eight they work with is a question mark credit me and it was a question mark as we reported at the time you know and if we ... were before him or the sense that ... he has a question of whether they're going to open for business the next they made the amassed seven billion dollars or so in positions that they didn't intend to buy ... and eat you know that's just a very scary thing for Indy for him ... and it was ... from what we know ... he'll coding error and an upgrade of software so ... for for its been around since the mid nineteen nineties he does have to look at that and go ... you know as one is Mark Gordon anti were Research told me you know it's it's terrifying to think that that ... that night you he considered ... you know as many did to help with top notch technology ... that that can happen so that predicts that it is stark ... one of the firm's is speaking as a firm called Virtu Financial you interviewed yet to fully executives ... please include so that re do we hear from Chris Concannon and his hand and is our executive vice president and he talks about ... their reflections a little bit I'm on ... the day that the artists first when I had its troubles ... we deal with operation rescue everyday we can to ... exchanges in markets around the globe ... physical type of connections that we interact with them on ... and um ... so we're we're managing our risk every day we have implemented procedures that actually protect us from both operational risk and trading risk ... um when I ... look back on what happened ... that day to Knight Capital and was obviously unfortunate ... home we Thomas Eagleton ourselves and our own systems and procedures ... and felt comfortable that that that same event would be very very difficult to have been ... inside our own technology ... everybody thinks reload it ... what I did I'd say that that's what we're tired that ... everybody's talking about different levels of control smack algorithms which are that ... you know that the most minute detail to the trading strategy to wet leaves the firm to what the exchange seems ... to getting reports back from the exchange so that you have ... a different ... on a different mindset your sis term ... gets glitzy ... you still are seeing what the exchanges sitting back and that and I actually us Douglas E fear of the same firm he's he's the president and chief operating officer ... Andy you know this firm is one of the biggest trading firms in the country and and on many markets in Europe and Asia ... so you know they they deal with this on a daily basis is he explained and he talked about one tool they use cold drop copies ... which a lot of friends and talk about these guys that the only ones but ... you get real you can get real time reports back in and build proprietary systems that ... compare what your systems are saying you can't sweat the exchanges say you've done and he talked a little bit about that ... we connect over a hundred nineteen venues around the world so we are reliant is in large measure on their technology is Lazaro ... and so we have implemented wherever it's available ... is a system of real-time drop copies essentially what that means ten years we get ... a separate fee to separate from the half in which we get our cars confirmations of our borders ... a separate real-time drop copy that says ... here is that we see as a venue that you have traded ... we have our own record it says this is what we think we've traded up and in real time we're comparing us to ... it is in the in the talks these people for years even covering this story to write the whole high for the rise of high frequency ... have you noticed a change in the toner with these guys are saying how they're sounding since the Capitals problem ... I sure any it's it's just that that is as we reported today that there definitely is ... here for one thing ... nobody wants to raise money so let's be honest like there's a motivating factor here nobody wants to go through at Knight Capital and two ... and also ... you know there's a fear of regulation there's a fear of Congress saying enough's enough there's already a lot going on looking at high speed trading think that that that you know ... where ... you might be disadvantaged whether the benefits ... so they wanna head off ... what they see is burdensome regulation ... and also ... they don't wanna lose money so nobody wants to be here today gone tomorrow it's not you know ... so AG thing to accept some ... kidding of some profits in order for more security in the form of some rules or regulations well I mean I think you're the same summer that happend there have been in settlements with exchanges ... you know that this summer the major exchanges increase Nasdaq had its problems with the Facebook IPO ... it all white investigation there you know ... the chances are that you know thirty half to spend more money to on compliance near stock exchange was having to do that ... in a direct adds it's a lot of that is Ardi happens that Ardi public so ... it's it's going around the case for us to think you're a much excellent story check that one out in the paper and online thing so I think ...